Role of AI in Preventing Financial Crime: A Comprehensive Analytical Review

Financial crime is now considered the biggest threat to the world economy. It is increasing rapidly, with huge losses every year. Traditional fraud detection methods have proven inadequate in the race, with fraudsters continuously adopting newer tactics to challenge the new technology. This review paper answers how Artificial Intelligence (AI) is transforming the dimension of financial crime prevention from a comprehensive analytical perspective. The paper will assess the rise of different AI methods to tackle dynamic fraud and discuss their strengths and weaknesses with real-world applications. Here, special attention has been given to evaluating the nature of the financial fraud data, the challenges that may arise during deployment and real-time analytics. In advance, this review paper has discussed some new technologies such as Explainable AI(XAI), federated training, and others, emphasizing their potential to improve fraud detection systems regarding accuracy, scalability, and transparency. By recognizing existing gaps and providing future direction, this study aims to contribute to developing a more accurate, transparent, and efficient fraud detection framework in the financial sector.